When it comes to the cannabis market, most of the attention seems to be focused on California, but Florida is also rapidly making a name for itself. In fact, Florida has been adding about 2,600 medical marijuana patients each week. This third-largest state by population is now also the second-largest when it comes to legal cannabis.
This growth is definitely an incredible one when you look at the fact that it took New York for nearly two and a half years to reach the count of 60,000 patients. Things get even more impressive when you put into consideration that the state of Florida is a fairly restrictive one in terms of the medical marijuana program.
This market growth has been accomplished despite the fact that edible products are not available for purchase and flower for smoking is not allowed yet. All things concerned, Florida market has a pretty unique set up, and this is why it’s one of the most attractive markets for large cannabis companies.
Florida’s cannabis market is a limited-license one. It started with the initial limit of 14 licensed companies, with the recent addition of eight new licenses after months of legal battles. While there are some states where growing cannabis is legal for any purpose, there are 16 states where laws allow the use of medical marijuana but don’t allow patients to grow their own, and Florida is among them.
But Not So Limited
Nevertheless, there is one aspect that sets Florida apart from these other states, and that is the scale allowed by a license there. For example, license-holder in Massachusetts can open three recreational or potentially medical cannabis dispensaries. Such three -store footprint allows for a pretty limited scale, so the result is usually that cannabis stores are selling products coming from a variety of companies. On the other hand, any license-holder in Florida is allowed to open 35 cannabis dispensaries. And even that number is set to expire and go up in April 2020 due to the increasing patient counts.
It is obvious that limit this much higher allows for better scale, so larger companies are able to become vertically integrated and end up selling exclusively or at least primarily their own products. At this point, seven large businesses dominate the market – Curaleaf, Trulieve, AltMed Florida, Vidacann, Liberty Health Sciences, Knox Medical, and Surterra Wellness.
Among those, Curaleaf and Trulieve already sell products exclusively created in-house. By achieving this vertical integration, both of these firms receive 100% of the profits on their own products they sell and have therefore enabled increased profitability and higher gross margins.
If you take a look at Florida’s given population and the number of tourists that reaches 100 million annually, full implementation of the recreational program could easily boost this projected revenue even further.
The Booming Market
On top of this attractive regulatory scheme, or maybe precisely because of it, Florida’s medical cannabis market is obviously booming. Since the state of Florida weekly releases reports containing detailed statistics about the number of cannabis licensed dispensaries, amount cannabis dispensed, and patient counts, it’s all there, black on white. Only in the first quarter of 2019, the average patient count has gone up to 235,000, and they’ve consumed 757 kilograms of medical cannabis. On a year-over-year basis, that’s a nearly 400% increase in cannabis sales and nearly 200% inpatient counts. And statistics are continuing to boom as we speak.
This growth of the cannabis market in Florida is not going to stop any time soon since investors have a wide variety of options for how to invest. This is obvious from the fact that Vireo Health is probably the only large multi-state cannabis company without a presence among every other major U.S. cannabis company who already have a license to open 35 dispensaries.